Sh130m fund targets leather sector SMEs with affordable loans

Money Markets Media Owners Association chairman Hanningtone Gaya (left) with Industry secretary Adan Mohamed at an event in Nairobi on February 23, 2017. PHOTO | SALATON NJAU  

By JAMES KARIUKI

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Summary

• The Kenya Industrial Estates (KIE) will manage the fund from which the SMEs will borrow at low-interest rates.
• PTA Bank has provided Sh30 million while the government has set aside Sh100 million for the kitty.
• KIE will ensure that all SMEs across the country dealing in leather benefit from this kitty 

The local leather industry has received a shot in the arm after the establishment of a Sh130 million revolving fund to help SMEs in the sector scale up production.

Industry, Trade and Co-operatives secretary Adan Mohamed said the Kenya Industrial Estates (KIE) would manage the fund from which the SMEs would borrow at low-interest rates.

“PTA Bank has provided Sh30 million while the government has set aside Sh100 million for the kitty.

“The KIE will ensure that all SMEs across the country dealing in leather benefit from this kitty,” he said.

However, the maximum amount of the loans and the interest rate are yet to be set. Mr Mohamed was speaking at the launch of a five-year strategic plan for the Kenya Footwear Manufacturers Association in Nairobi on Tuesday.

“Tooling for mass production is the only way to help SME access the export markets and that is why we are creating the revolving fund to be managed by KIE — where SMEs will be incubated, nurtured and assisted to meet the required standard,” said Mr Mohamed.

He urged shoemakers to establish self-help groups in their counties to enable them bargain for market access as well as seek permanent sheds.

He said over the past three years the government has spent Sh200 million in equipping SMEs at the Kariobangi Light Industries in Nairobi to make leather products for the local and export markets.

“Part of the funds have also been used to purchase training machines for Thika Leather Products Institute,” said Mr Mohamed.

Kenya Leather Development Council chairman Titus Ibui said the recently refurbished institution is now open and urged counties to sponsor youth to attend training there.

Kenya Footwear Manufacturers Association chairman James Mwaura said SMEs dealing in shoes production could meet the production gap if assured of a ready market for their products and the uncontrolled imports stopped.

The strategic plan seeks to promote training of artisans in modern shoe and leather production as well as see the establishment of modern tanneries to improve the quality of leather available in the market, which is seen as key in attracting investment into the sector.

Mr Mwaura said 90 per cent of Sh9.4 billion worth of leather exports is in form of semi-processed products, leaving significant room for value addition.

“Further processing of finished leather and leather goods will create an additional 35,000 jobs and add between Sh15 billion and 25 billion to the value, as well as substituting some portion of the shoe import bill for Kenyans,” said Mr Mwaura.